Barry’s Pickings Online – Post-Election Thoughts

Will the Trump administration repeal the DOL’s fiduciary rule, and is comprehensive tax reform possible?

PS_Barry_JCiardielloArt by Joseph CiardielloDilbert says – Change is good. You change first. 

The right analogue is Obama in 2009: when he takes office, President Trump will have the advantage of Republican control of both houses of Congress. That means that he and the Republican leadership will be able to move legislation in a way that was impossible for either party during the last six years of divided government.

Also: much of the policy made by the Obama Administration during the last six years was made solely on executive authority. Depending on how far President-elect Trump and his Administration are prepared to go, they can reverse much of that.

What does that mean? I’ve got three really big questions.

Will a new Trump Administration repeal the Department of Labor’s (DOL)’s controversial Conflict of Interest rule? Maybe.

In a memorandum issued January 20, 2009, President Obama’s (then) Chief of Staff Rahm Emanuel instructed all agencies that no proposed or final regulation be sent to the Office of the Federal Register for publication “unless and until it has been reviewed and approved by a department or agency head appointed or designated by the President after noon on January 20, 2009.”

The (Bush) DOL had finalized guidance on investment advice on January 16, 2009. That final rule was not, however, published in the Federal Register until January 21, 2009. So—in line with Mr. Emanuel’s instruction (sort of)—the new (Obama) DOL extended the effective date of the advice regulation for 60 days and re-opened the comment period.

DOL’s ultra-controversial conflict of interest rule is “final” and has been published in the Federal Register. But it’s not effective until April 2017. It’s entirely conceivable that a new (Trump) DOL could extend the effective date of that regulation, re-open the regulatory process and, perhaps, as many in Congress have suggested, get the Securities and Exchange Commission (SEC) involved.

At a less spectacular level, there are a host of regulatory issues before the Obama DOL that may be treated in a significantly different way by a Trump DOL, including: electronic participant communications, state plans and open multiple employer plans (MEPs) and the defined contribution (DC) plan annuity safe harbor.

NEXT: Tax reform and paying for infrastructure spending

Is comprehensive tax reform possible? Again, maybe.

Tax reform—simplification and rate reduction—is certainly a priority for Congressional Republicans. And, while generally 41 Senators can block legislation in the Senate, the reconciliation process was used by President Bush in 2001 to move his tax bill with a simple majority in the Senate.

This matters for retirement policy because any comprehensive revision of the tax code is likely to affect the retirement savings tax deal. Indeed, the 2014 tax reform proposal by Republican Congressman Dave Camp of Michigan (then Chairman of the House Ways and Means Committee) included a “surcharge” on defined contribution plan contributions that operated something like the Obama Administration’s proposal for a cap on (among other things) the tax exclusion for DC plan contributions.

Aside from tax reform, there are not a lot of obvious left versus right retirement saving policy issues. More important will be how to deal with the cost of, for instance, covering participants who currently do not “have access” (as they say) to a workplace retirement plan.

How are we going to pay for all this infrastructure spending? 

President-elect Trump campaigned advocating a program of (a minimum of) $550 billion in infrastructure funding. To pay for that he proposed setting up a public fund that citizens could invest in: “it will be a great investment and it’s going to put a lot of people to work.”

In the past, infrastructure spending has been funded by, among other things, increases in Pension Benefit Guaranty Corporation (PBGC) premiums and defined benefit (DB) plan funding “relief.” Is it possible that Congress might agree to a scheme in which retirement savings could be used to fund infrastructure? That sort of thing has been discussed with regard to state and municipal retirement plans.

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There are many smaller issues the destiny of which was changed—for better or worse—by the election. But those three, for me, are the big ones.


Michael Barry is president of the Plan Advisory Services Group, a consulting group that helps financial services­ corporations with the regulatory issues facing their plan sponsor clients. He has 40 years’ experience in the benefits field, in law and consulting firms, and blogs regularly about retirement plan and policy issues.          

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of Asset International or its affiliates.